The Blubber

The Department of Justice announced on Friday that Andrew Left, a securities analyst, trader, and television commentator on networks like CNBC and Fox Business, faces charges of securities fraud. He is charged with one count of engaging in a securities fraud scheme, 17 counts of securities fraud, and one count of making false statements to federal investigators. As a short seller, Left profited by betting that stocks would decline.

The DOJ stated that Left operated under the name Citron Research, which published investment recommendations on its website. His research covered companies such as Tesla, GameStop, Grand Canyon Education, and Peloton.

If convicted, Left could face a maximum sentence of 25 years for the securities fraud scheme charge, 20 years for each securities fraud charge, and five years for the false statements charge.

The indictment claims that Left commented on publicly traded companies and issued recommendations on their stocks. His commentary often featured sensational headlines and exaggerated language to elicit strong market reactions. The charges allege that Left knowingly manipulated stock prices by targeting stocks popular with retail investors, using social media to spread his recommendations and capitalize on the resulting market movements.

Additionally, the indictment states that Left would establish long or short positions in companies he commented on, then quickly exit these positions following the publication of Citron's reports to profit from the ensuing price changes.

The Securities and Exchange Commission (SEC) also charged Left and Citron in what it described as a $20 million fraud scheme involving "bait and switch" tactics to deceive investors. The SEC's complaint, filed in the United States District Court for the Central District of California, accuses Left and Citron Capital of violating federal securities laws' antifraud provisions.

"Andrew Left took advantage of his readers. He built their trust and induced them to trade on false pretenses so that he could quickly reverse direction and profit from the price moves following his reports," said Kate Zoladz, Director of the SEC’s Los Angeles Regional Office, in a statement.

The SEC is seeking disgorgement, prejudgment interest, civil monetary penalties, conduct-based injunctions, an officer-and-director bar, and a penny stock bar against Left.

Representatives of Citron Research did not immediately respond to a request for comment. According to the complaints, Left has relocated from Beverly Hills, California, to Boca Raton, Florida.

This is not the first time Left has faced allegations of misconduct. In 2016, a Hong Kong tribunal found that Left engaged in market misconduct by publishing false or misleading information about the Chinese property developer Evergrande in 2012. However, Evergrande, which accumulated over $300 billion in debt, was ordered to liquidate earlier this year after failing to reach agreements with its creditors.